Bacon's Rebellion

In my column in the new edition of the Bacon’s Rebellion e-zine, I develop an idea that has become a recurring theme in this blog.

The starting premise is this: When government makes transportion improvements — highways, transit stations, interchanges, road widenings, whatever — it creates economic value for the landowners lucky enough, or shrewd enough, to own property in the right location. The public (through the agency of the government) creates this value, not the landowner. Why, then, shouldn’t the public capture some of that value to help finance the transportation improvement?
Virginia transportation policy relies overwhelmingly upon taxation of motorists to build the improvements, and to a lesser degree upon tolls levied upon the users of a particular facility. In some localities, developers contribute to the funding of road improvements through proffers, but the proffers are rarely integrated into a coherent system. I propose a four-part approach to major transportation projects:

• Create a Community Development Authority (CDA) to issue bonds to pay for public improvements such as roads, light and heavy rail lines, transit stations or even bus shelters.
• Overlay the CDA with a Tax Increment Financing (TIF) district that taxes the landowners who benefit from the public investments. Use the revenue stream to pay off the CDA bonds.
• Sweeten the pot, as necessary, by giving landowners the right to develop their parcels at greater density. The combination of higher density and public improvements would more than compensate landowner/developers for the expense of the special tax district.
• Require developers to implement Traffic Demand Management (TDM) plans to offset local congestion resulting from denser development. It is critical that these plans be robust, capable of taking large numbers of cars off local streets. They also must be sustainable, capable of standing on their own after developer has completed the project and has ended subsidies to van pools and other ride-sharing programs.

I don’t pretend this approach will work everywhere. It won’t. But it can work in a lot of places. When combined with the other alternatives explored on this blog — congestion tolls, telew0rk, ride sharing, VDOT reforms, intelligent transportation systems and all the rest — there’s no reason that Virginia can’t stitch together an effective transportation policy without recourse to higher taxes.

Bacon’s Rebellion columnist Chris Braunlich has pinpointed a fundamental problem with the education systems in Virginia and most other states: Funding formulas are based on the wrong metrics.

Education funding is designed for “Ozzie and Harriet.” The stars of that old ‘50s-era TV show were not poor, they spoke English, their children rarely had acknowledged disabilities. Furthermore, they and their neighbors never moved out of the neighborhood and always attended the nearest school. If some kids didn’t do as well as others, if there were achievement gaps … well, people just looked the other way. Guys named “Lumpy” could always make a decent living as an auto mechanic.

But in a standards-based era, achievement gaps are not, and cannot, be tolerated. The jobs of tomorrow, whether rocket scientist or auto mechanic, demand a higher level of skill, training, and education than those required to fix a 1955 Chevy.

Citing the bi-partisan work of the Thomas B. Fordham Institute, Braunlich suggests that school funding should “follow the child.” This is similar to a voucher program, but it sidesteps the ideological divisions of vouchers because it applies only to public schools. It also differs from vouchers in that children with with disabilities or limited English proficiency would bring more money with them. Such a system, writes Braunlich, would:

Drive those dollars down to the school level, empowering school-based leadership to decide how best to spend the funds educating the students. By putting resources for decision-making at the school level, principals can do for kids what’s needed at their particular school, not what’s decided at the district level. If one school needs more tutoring, or another needs an additional aide, or a third needs more teacher training for new teachers – the school chooses, rather than a “one-size-fits-all” central office decision.

Drawing from analysis conducted by Richmond economist Christine Chmura, Doug Koelemay has written a column, “Connecting the Crescent,” that will change the way downstate Virginians perceive Northern Virginia.

We downstaters have always recognized (and envied) the incredible economic success of NoVa. The more enlightened of us have even appreciated the disproportionate contribution that NoVa has made to the Commonwealth’s tax base. What we residents of the Rest of Virginia (RoVa) have not sufficiently understood was the growing contribution that NoVa businesses are making to growth in our downstate communities. Here are the key numbers:

For the five years ending in 1995, the [Chmura] report notes, Northern Virginia firms created 17,191 new jobs in other areas of the state. That’s an average of 3,400 jobs a year downstate. For the five years ending in 2000, Northern Virginia firms created 28,560 jobs in other areas of the state, an average of 5,700 jobs a year. And for the five years ending in 2005, Northern Virginia firms created 36,191 jobs in other parts of the state. That’s an average of 7,200 jobs a year, double the rate of the early 1990s.

Playing on its defense industry ties, Hampton Roads has been the primary beneficiary of NoVa’s dynamism, but the Richmond region has benefited as well.

Koelemay, a Northern Virginian who sallies frequently to Richmond and other downstate locations, draws the inevitable conclusion: It’s in RoVa’s self interest to ensure that NoVa’s economic prosperity continues. If that means investing more in transportation, then so be it.

In this week’s edition of the Bacon’s Rebellion e-zine, Conaway Haskins interviews Vince Harris, author of the Too Conservative blog. Harris, a conservative Republican, began blogging a year ago at age 17, and has built Too Conservative into one of the more popular GOP-leaning blogs in Virginia. Though only a college freshman now, he has packed in an extraordinary amount of campaign and legislative experience, including stints with Rep. Tom Davis, and Sean Connaughton in his run for lieutenant governor.

Read the profile here.

Building on the Bacon’s Rebellion policy of highlighting the efforts of fellow bloggers, I will append my biweekly “blog spottings” to Conaway’s profile. Some of these blogs are newly published, some are new only in the sense that they have come to my attention. But one thing you can count on: They are geared heavily to covering state/local political, public policy, economic development and/or community development issues. This week’s spottings include:

Ox Road South, a blog maintained by Chap Peterson, a Fairfax lawyer, former member of the Fairfax City Council and former member of the Virginia legislature.

The Practical Populist, a blog maintained by “Mason,” a self-described populist.

The Shape of the Future, a blog maintained by Andrea Epps, of Chesterfield County, with a focus on local growth and development.

Rebuilding Place in the Urban Space, a blog maintained by Richard Layman, of Washington, D.C., covering urban design and growth issues in Metropolitan Washington and nationally.

The July 10, 2006, edition of Bacon’s Rebellion is now online. Columns and features include:

CDAs, TIFs and TDMs
Lawmakers are overlooking a huge source of revenue to underwrite new transportation projects — the increase in property values made possible by the transportation improvements themselves.
by James A. Bacon

Connecting the Crescent
The Northern Virginia economic engine isn’t powering growth only in metro Washington, it’s creating jobs in Hampton Roads and Richmond, too. Politicians need to get with the program.
by Doug Koelemay

Burned Out
The story of Bill Downey, a Fauquier County supervisor who declined to run for re-election, is more than the tale of one man’s frustration: It’s emblematic of spreading dysfunction as non-urban communities begin to urbanize.
by E M Risse

Ozzie and Harriet School Funding
It’s time to overhaul arcane educational funding formulas that might have worked in the ’50s but create endless red tape today. Dollars should “follow the child” to his or her public school.
by Chris Braunlich

Hold on to Your Wallets!
GOP delegates are bragging that they held the line against new tax increases. They are either disingenuous or too naïve to realize that the next tax increase has been set in motion.
by Phillip Rodokanakis

Marriage A,B,Cs
There are good reasons for Virginia to define marriage as between a man and a woman. It is the best institution yet devised for raising healthy, productive citizens.
by James Atticus Bowden

Nice & Curious Questions
Blasts from the Past: Virginia’s Drive-In Theaters
by Edwin S. Clay III and Patricia Bangs

Blogology
Too Conservative: Vince Harris
by Conaway Haskins

Virginia’s cultural liberals and conservatives are locking horns again, this time in Loudoun County. The issue: R-rated movies in public libraries. The Board of Supervisors has a problem with spending public money to stock the library with R-rated titles, according to an article in the Washington Post. Civil libertarians are accusing the supervisors of something akin to censorship: violating the public’s right to read (or listen, or view).

To my mind, this is the wrong debate. I don’t think the Loudoun public library system should be spending any of its $10.5 million budget on videos of any kind, whether it’s “Bambi” or “Braveheart”.

Are there not enough video stores in Loudoun County? Does the cable service, with its movie channels and and Pay Per View, offer an insufficient choice of movies? Has Amazon.com ceased delivering DVDs to Leesburg?

Frivolous controversies like this one are the inevitable result of government getting involved in something it has no business in. By its intrinsic nature, government in a democratic society politicizes everything it touches.

Federal education officials, reports the Associated Press, are warning Virginia that it could lose federal money “because its standards for highly trained teachers are too relaxed.”

The state claims that the number of classes taught by “highly qualified teachers” is 95 percent, up from 83.5 percent three years ago. But the U.S. Department of Education is questioning those numbers.

Under the No Child Left Behind education law, all classes must be taught by educators who have a bachelor’s degree, a teaching license and can demonstrate knowledge in their subject area. At issue is how Virginia measures whether teachers are knowledgeable in the subjects they teach. For example, veteran teachers in Virginia can be considered highly qualified if they have at least a master’s degree. But the federal government thinks teachers’ advanced degrees should be in the subject they teach.

Predictably, victims rights groups are chiming in. The Citizens’ Commission on Civil Rights said Virginia’s standard is unfair to students with disabilities. Said Executive Director Dianne Piche: “It’s almost like some of the states are saying that special-education students aren’t entitled to have teachers who really know math or really know history.”

If Virginia doesn’t address the putative problem, the federal government could cut $2.1 million in funding.

Is the problem real? Is this another example of federal bureaucratic meddling? Or is it a case of state bureaucrats manipulating the numbers to look good? I don’t know. (Conaway Haskins has addressed the issue in his column, “Teaching Our Teachers.”) In either case, it strikes me as an example of everything that’s wrong with a public education system accountable to three different, oft-conflicting levels of government: The system consumes itself with bureaucratic controversy.

In the next edition of the Bacon’s Rebellion e-zine, columnist Chris Braunlich will highlight a brilliant, bipartisan proposal from the Thomas B. Fordham Institute that would end much of the bureaucratic nightmare.

Virginia’s 110 wineries have lost the right to sell their products directly to retailers such as restaurants, wine shops and grocery stores, the Richmond Times-Dispatch has reported. A letter from the state ABC board last week confirmed that the wineries, after a lengthy lobbying and legal duel with wine wholesalers, were limited to selling their wares directly from their farms. Reports Greg Edwards:

The loss of self-distribution is a bitter turn for the wineries. Some say the loss could end what has become a welcome success story for Virginia agriculture — three decades of growth by the state’s wine industry.

The regulatory issues are too complex to summarize here. I would refer readers to Edwards’ story. But the bottom line is this: The wine-and-beer wholesalers have upheld their state-sanctioned monopoly control over wine distribution in Virginia, preserving their monopolistic profit margins. The most immediate losers are the small wineries who can’t afford to hire wholesale distributors to handle their products. Other losers are wine lovers, such as myself, who enjoy buying local wines and now will be faced with a diminished selection.

If Virginia wineries go out of business, the roster of losers will expand to include everyone who appreciates the beauty of Virginia’s farmscapes. Farming is an endangered activity in Virginia. When farmers give up on farming, their land generally reverts to woodland or gets sold to developers. A consequence of upholding the wholesalers’ monopoly could be the loss of more picturesque fields, meadows, fences and farmsteads.

“There is no winner except the wholesalers,” said Mitzi Batterson, of James River Cellars, a Hanover County farmer who added that she expects to lose 25 percent of her business. Not quite true. There is one other winner: Virginia’s political class. By protecting the privileges of Virginia wine-and-beer wholesalers, legislators ensure a steady flow of campaign contributions. Anyone who thinks of Virginia as a commonwealth committed to free market principles is living in la-la land.

Once again, Washington Post editorial writers have taken a cheap shot against Virginia’s General Assembly rather than bestir themselves to think about the issue under discussion. In making the case for the proposed Purple line, a mass transit line running parallel to the Capital Beltway in Maryland, the WaPo finds it necessary to make an invidious comparison with Virginia: “The state legislature, enslaved to anti-tax dogma, can’t seem to face the scale and urgency of the state’s transportation dilemma.”

Now, I would agree that a circumferential Metro line would offer tremendous benefits, just as the WaPo points out: “It would begin to compensate for Metrorail’s main deficiency — its radial design, which reflects planners’ flawed assumption that the District would forever be the lone focal point for the region’s development and job growth. Much of the economic boom in recent decades has taken place in or near suburban hubs ringing the city; naturally, traffic has followed.”

Underpinning the WaPo’s swipe at the General Assembly, however, are the assumptions that (a) it is the responsibility of the taxpayers to foot the bill for mass transit, regardless of costs and benefits, and that (b) only the dogmatic intransigence of downstate, low-tax zealots in the House of Delegates, who, by the way, don’t care a whit for Northern Virginia or understand its problems, stands in the way.

The WaPo editorial chooses not to explore the fact that public financing for a massive Metro expansion would represent an unconscionable transfer of wealth from taxpayers to the owners of land located near the Metro stations. Robbing the Poor and Giving to the Rich seems to be the new mantra of the Washington Post, except, of course, when it comes to federal income tax policy, when its editorial writers revert to class warfare mode. In either case, you can count on the Post to bash the Republicans.

As I outlined in detail in my column, “Rail Ripoff,” about the Rail-to-Dulles project, it is possible to craft a funding mechanism to support construction of heavy rail without dumping the entire cost onto the general public. The steps are these: (1) Create Community Development Authorities around the proposed Metro Stations to issue bonds that would pay for construction of the stations and rail line; (2) overlay the CDAs with special tax districts that tax the commercial property owners and create a revenue stream to pay off the bonds; and (3) allow property owners to build at greater densities, as needed, to provide them sufficient financial payback to make the whole arrangement worthwhile.

Let’s recapitulate: The WaPo would tax Joe Sixpack to build mass transit and further enrich wealthy property owners. By contrast, a CDA strategy would tap the increased property values created by mass transit to pay for its construction, yet structure a deal to create a win-win-win for everyone. Admittedly, House Republicans haven’t endorsed the CDA strategy, but, then, they’re not calling the Post names. Who’s more ignorant — the WaPo or Virginia legislators? Who’s more intransigent? Who is more blinded by ideological dogma?

Farmer-entrepreneur Chuck Miller is selling homemade whiskey from a shed outside the barn — entirely legally. According to an article in the Fredericksburg Free Lance-Star, Miller’s Belmont Farm Distillery became Virginia’s only licensed on-the-farm liquor store on July 1.

Miller had been selling his whiskey through state ABC stores. Now, thanks to a bill patroned by Del. Ed Scott, R-Culpeper, Miller now has an ABC license to sell either of two products–Virginia Lightning moonshine and Copper Fox whiskey at the gift shop in front of his distillery. Like Virginia’s wineries, his farm has become a destination — not only can tourists partake of the moonshine, they can see how it is made.

Ventures like Miller’s represent a model for Virginia agriculture — creating a boutique product, whether whiskey, wine, cheese or what have you — and packaging the farm as a destination for weekend tourists from nearby cities. Virginia can encourage this type of agriculture/tourism by making it easier for people like Miller to do business (assuming, of course, that they meet all food-safety requirements). After all, moonshining got its start in the foothills of the Blue Ridge Mountains — Franklin County, Va., was a renowned hotbed of moonshiners. Maybe the next step is a state-sanctioned Moonshine Heritage Trail!

Lost amidst the recent General Assembly budget battle was an announcement by the Center for a Better South – a nascent progressive think tank covering the Southeastern US – on the publication of its first policy book. (Disclosure: I write for the Center’s ThinkSouth blog but was not involved with the production of this work). “Doing Better: Progressive Tax Reform for the American South” features a state-by-state assessment of tax policies and offers up 11 suggested tax reforms for Southern states to pursue. The book was written by senior staff at the nonpartisan Georgia Budget & Policy Institute.

In the press release for the book, Center president Andy Brack states, “The South of today isn’t the same as the South of our parents and grandparents. We live in a more dynamic Sunbelt that has transformed from the goods-based, mule-driven days of the 20th century into a knowledge- and service-economy that competes globally. Unfortunately, our state governments generally haven’t adapted to the new economy. Their structures have outdated tax components that need to be modernized for today’s market. State lawmakers should look at their taxing structures holistically – at income taxes, sales taxes, property taxes and more – and develop better ways to be fairer to everyone,” According to the author’s scorecard, Virginia has addressed 5 of the 11 suggested reforms.

In light of the recent estate tax rollback and the upcoming brouhaha over possible new tax revenues for transportation investments, this book may provide additional insight to inform policymaking. While the political culture of the Commonwealth is somewhat cautious when it comes to regional cooperation and criticism beyond the Virginia border (except Wall Street bond raters it seems), Virginia’s lawmakers, bureaucrats, policy wonks, and other observers would be wise to review this book to glean any useful information that it may provide. In the absence of a significant policy shop to call their own after the closing of Public Policy Virginia, Virginia progressives may want to examine the book for tax policy alternatives and new messaging. I will be offering my own assessment of the book and its strategies over the coming weeks.

For more information about the Center, check out this interview that I did with Andy some months back.

Occasionally, the spirit of sweetness and light descends upon me, briefly dispelling my jaundiced view of the state legislature. Most recently, I found myself nodding with approval when reading about a study by the Joint Legislative Audit and Review Commission on Virginia’s manufacturing competitiveness. As John Reid Blackwell puts it in the Richmond Times-Dispatch: “State lawmakers want to know how much it costs manufacturing companies to do business in Virginia.”

That’s a worthwhile question to act. Despite its problems, manufacturing remains a pillar of Virginia’s economy. If manufacturers are to remain competitive in a global marketplace, state and local governments need to strip out all unnecessary costs and regulations.

The National Association of Manufacturers has found that regulatory costs account for nearly 22 percent of every dollar paid in manufacturing wages in the United States. What’s the comparable number for Virginia? Nobody knows. What are all the taxes and regulations that affect manufacturing costs? Nobody has compiled an inventory. We need to know, and the General Assembly is making an effort to find out.

In case you missed the headline’s wordplay on “Bad Pet Tricks,” let me hammer it home. Many shopping center developers are one-trick ponies. They know how to do one thing — plop a long, one-story building in the middle of a big parking lot — and they do it over and over. Sometimes, they seem so bored by it all that they don’t even do that one trick very well.

Waldo Jaquith has a great example in his critique (with photos) of a new shopping center going up off U.S. 29 north of Charlottesville. The shopping center has moved enormous quantities of dirt in order to elevate itself from the main drag. The interesting result is that, between the escarpment separating the road and shopping center, and the vast parking lot that pushes the buildings away from the road, it is nearly impossible for motorists to even see what’s in the shopping center! What merchant would want to locate a store there?

Was anybody in the developer’s office paying attention here?

Waldo also offers some sound observations on the importance of streetscapes and the decline of Albemarle County’s inner ring of suburban development. Go get ’em, Waldo!

I know I shouldn’t rise to the bait — it’s not as if Moveon.org is taken very seriously in Virginia. But, hey, it’s a slow news day, and stomping out economic illiteracy is always a worthy goal. It seems that the liberal political organization has been holding rallies around the country, including one in Staunton of all places, trying to draw the connection between Big Oil campaign contributions to Republicans and the high price of gasoline. As Chris Graham tells the story at the Augusta Free Press:

Since 1990, the oil industry has given more than $190 million to members of Congress – “and they’ve given three times as much to Republicans as they have given to Democrats,” [Moveon.org spokes person Nita] Chaudhary said.

“That money has guaranteed a policy that serves an industry over the public. Given that gas prices are off the charts, given the fact that scientists are continuing to warn us that global warming is at a tipping point, and given the fact that we’re in an increasingly uncomfortable situation in the Middle East, we can’t afford the Republican addiction to oil money anymore.”

The first question that comes to my mind is this: Do these people believe this twaddle, or do they peddle it knowing that it’s wrong but figuring that a gullible public will fall for it anyway?

Why are gas prices rising in the United States? It’s called supply and demand. Global demand for oil is increasing, driving up the price of petroleum. The high cost of developing new oil reserves, coupled with political instability in multiple oil-producing countries, has made it difficult to increase production enough to keep up with rising demand. The situation in the United States is aggravated by (a) environmental policies that restrict development of U.S. oil reserves, (b) environmental policies that restrict the development of new gasoline-refining capacity, and (c) the lobbying effort by agricultural interests, not big oil interests, to require the integration of ethanol-based fuel, at considerable cost, into U.S. gasoline supplies.

But there’s more…

“What we’re trying to say is, big oil contributes to Congress – and because of that, Congress is beholden to Big Oil, they get to write energy policy. We’re saying – don’t take any more oil money, and start coming up with sane energy policies. Things like increasing the CAFE standards, putting money into renewable resources, and also energy sources that don’t create emissions like wind and solar,” said Lee Godfrey, a Staunton MoveOn member who organized a Rally for an Oil-Free Congress that was held last week in the Queen City.

There’s an element of rationality in the argument for mandating better gasoline mileage in automobiles — although such a mandate would limit consumer choice by forcing Americans to buy smaller cars, it would reduce gasoline consumption. As for the other nostrums – newable energy, wind, solar, etc. — as desirable as they are, they would have zero impact on the price of gasoline. You see, wind and solar power would increase the supply of electricity, not gasoline! And we haven’t figured out a way yet to produce electric-powered automobiles that anyone will buy.

The other foolishness embedded in the Moveon.org critique is that conservation is good but high gasoline prices are bad. I happen to believe that conservation is very, very good. But common sense tells you that the best way to get people and businesses to conserve energy is to charge them more for it! If Moveon.org’s brow-beating of the petroleum companies succeeded in nudging down the price of gasoline, it would only undercut the larger goal of conservation.

If Moveon.org cared to address the real problems instead of shilling for the Democratic Party, it would focus on the fact that Americans are burning more gasoline because they’re driving more. Duh! Getting people to drive less would require paying attention to dysfunctional land use patterns. Of course, that line of thinking wouldn’t fit the Moveon.org worldview. No one is going to believe that the Big Oil companies are paying off local Virginia politicos in order to perpetuate the scattered, disconnected, low-density patterns of development that forces people to drive more.

Ironically, you could make the argument that Moveon.org is doing Big Oil a favor by distracting people from the real cause of rising U.S. demand for gasoline. Hmmm. Makes you wonder. Could Big Oil be paying Moveon.org to muddy the issues? If you adopted Moveon.org’s conspiratorial mode of thinking, it would make total sense.

When the University of Virginia recruited Joe C. Campbell from the University of Texas and named him the Lucien Carr III Professor of Engineering and Applied Science, the hire went largely unnoticed outside of UVa. But the coup is highly significant in more ways than one.

Campbell is known for inventing a device — a high-speed avalanche photodiode — that changes photonic signals into electronic signals extremely quickly, reliably and with very little noise or distortion. That achievement won him membership in the elite National Academy of Sciences. Explains an article in the University of Virginia Engineering Magazine:

Campbell brings with him an extensive research agenda—and a team of graduate students and postdoctoral fellows to push it forward. “Essentially, everything we do involves converting light into large electrical signals,” he says. Campbell has projects under way that span the light spectrum, from ultraviolet to infrared. For instance, he is working with the Defense Advanced Research Projects Agency to create highly sensitive detectors that can pick out the characteristic ultraviolet signature of a missile plume in the midst of the radiation that pours from the sun.

From an economic development perspective, Campbell is the first of 10 National Academy of Sciences members to be recruited to the University of Virginia faculty as part of UVa’s program to transform itself into a national R&D powerhouse. Says President John Casteen: “The hiring of Joe Campbell is the first step in a strategy to transform scientific research here and to position the University of Virginia as a preeminent research institution in science and engineering.”

In an interesting juxtaposition, UVa is the center of agitation for the so-called “living wage,” which would increase wages for workers at the bottom of the compensation pyramid. UVa officials did not release any information on how much it was paying the super-star scientist to come to Charlottesville, but it was undoubtedly a princely sum. But that’s reality: If you want to build a world-renowned research institution, which is a prerequisite for creating an entrepreneurial, knowledge-based economy, you have to recruit world-class scientific talent. And it takes more than the magnificence of Mr. Jefferson’s architecture to do that. The benefit of paying top dollar to bring Dr. Campbell to Charlottesville — even to those at the bottom of the wage scale — is economic growth and increased opportunity for all.